With mounting costs of public transport and increasing traffic, owning a vehicle of your own has become more of a necessity than extravagance. When compared to cars, a two-wheeler is easier to maintain and consumes less fuel. If you are worried about the unexpected expenses that you will incur if you purchase a motorbike, applying for a two-wheeler loan is the best thing to do. With lot of leading banks in India offering two wheeler loans, you can not only get the vehicle of your dreams in no time but also pay back the loan without any financial stress through easy instalments. Along with that, you will be able to get hold of a lot of two-wheeler loan offers which will help you save a good amount on the interest outgo.
Before applying for a two-wheeler loan, you must always discuss about the prevailing interest rates with your banker and check your affordability. Since the interest rates can make or break your loan deal, always pay attention to the minute details about the rate of interest.
Current Two Wheeler Loan Interest Rates
Given below are the current interest rates for two wheeler loans offered by the leading Indian banks and financiers:
|Name of Bank||Loan Scheme||Two-Wheeler Interest Rate|
|State Bank of India||Super Bike Loan Scheme||1 year MCLR (7.95%) + 3.65% = 11.60% p.a.|
|SBI Two-Wheeler Loan||1 year MCLR (7.95%) + 9.25% = 17.20% p.a.|
|HDFC Bank||Super Bike Two wheeler Loan||APR: 8.61% to 17.13%||IRR: 8.60% to 14.65%|
|Two wheeler Loan||APR:10.55% to 34.08% Note- Up to December 2017||IRR:10.50% to 28.41% Note-Up to December 2017|
|Saurashtra Gramin Bank||Saurashtra Two-wheeler Loan Repayment Period up to 3 Years||15%|
|Repayment Period up above 3 Years, up to 5 years||16%|
|Bank of Baroda||Bank of Baroda’s Two-Wheeler Loan||One year MCLR (6.45%) + Strategic Premium + 4.00%|
|Punjab National Bank||PNB Vehicle Loans In which monthly income is being paid via concerned branch and/or under check off facility||< 3 years||1 Year MCLR + 3.25%= 11.4% p.a.|
|>= 3 years||1 Year MCLR + 3.75%= 11.90% p.a.|
|For every other loan including business concerns||< 3 years||1 Year MCLR + 4.25%= 4.12% p.a.|
|>= 3 years||1 Year MCLR + 4.75%= 12.90% p.a.|
|PNB Power Ride||Up to 36 months||1 Year MCLR + 1.75%= 9.90% p.a.|
|Andhra Bank||Andhra Loans for Two-Wheelers For loan term up to 36 months||1 Year MCLR (8.40%) + 1.95%=10.35% p.a.|
|For loan term above 36 months||1 Year MCLR (8.40%) + 1.95% + 0.25%= 10.60% p.a.|
|Bajaj Fin Serv||Customers are segregated into three bands, namely,||The best possible interest rate is offered to the customers on the basis of the bank’s pre-fixed loan parameters.|
|Medium||27% to 30%|
|L & T Finance||L & T Two-Wheeler Finance||Starts from 10.75% p.a.||The actual rate varies on the basis of the profile and credit worthiness of the borrower|
|UCO Bank||UCO Two-Wheeler Loan Scheme For General category||1 Year MCLR (8.45%) = + 4.40%= 12.85% p.a.|
|Accounts with full liquid collateral security (1.00% interest rebate)||1 Year MCLR (8.45%) + 3.40%= 11.85% p.a.|
|Accounts with 50% liquid collateral security (0.50% interest rebate)||1 Year MCLR (8.45%) + 3.90%= 12.35% p.a.|
|Syndicate Bank||Syndvahan Two Wheeler Loan||1 Year MCLR (8.45%) +2.10% =10.55% p.a.|
|Vijaya Bank||V-Wheels 2 Wheeler Loan||1 Year MCLR (8.50%) + 3.15% =11.65% p.a.|
|V-Combo (Special vehicle loan for home loan customers)||1 Year MCLR (8.50%) + 0.65% =9.15% p.a.|
|Allahabad Bank||AB Mobike Loan Scheme||1 Year MCLR (8.45%) +3.25%= 11.70% p.a.|
|Oriental Bank of Commerce||Oriental Vehicle Loan Scheme for General Public Up to 36 months||BR + 0.50% = 10.20% (Floating)||0.25% concession on the interest rate for loyal customers, group of employees and home loan borrowers|
|Up to 84 months||BR + 0.75% = 10.45% (Floating)|
|Shriram City Union Finance||Shriram Two-Wheeler Loans||Interest Rate will be offered at the lender’s discretion on the basis of the loan scheme opted by the borrower|
|Bank of India||BOI Star Vehicle Loan for 2 Wheelers including Super Bikes)||1 Year MCLR (8.30%) + 0.60%= 8.90% p.a.||Note- Festive offer valid up to 31.03.2018|
|Punjab & Sind Bank||Two-Wheeler Vehicle Loan||One Year MCLR (8.40%) + 2.00% = 10.40%||Note- Festive Bonanza Scheme valid up to 31.03.2018|
|Lakshmi Vilas Bank||Lakshmi Personal Vehicle Loan||1 Year MCLR (9.15%) + 3.10% =12.25% p.a.|
|Nainital Bank||Suhana Safar Loan Scheme For Tenure 1 Year MCLR||1 Year MCLR (8.35%) + 0.70%= 9.05% p.a.||Special concession is offered under Festive Offer|
|For Tenure 2 Years MCLR||2 Year MCLR (8.65%) + 0.40%= 9.05% p.a.|
|For Tenure above 2 Years MCLR||Above 2 Year MCLR (9.00%) + 0.25%= 9.25% p.a.|
|City Union Bank||CUB Easy Ride||3 Year MCLR + 4.80%= 14.50%|
|State Bank of Mysore||Up to 5 years||1 Year MCLR + 6.55% = 16.05%|
|State Bank of Travancore||Rs.50000 and below||13.85% p.a.|
|Above Rs.50000||12.85% p.a.|
|State Bank of Patiala||Floating Rate of Interest||1 Year MCLR + 6.25% = 15.75% p.a.|
|Fixed Rate of Interest||1 Year MCLR + 6.50% = 16.00% p.a.|
|Corporation Bank||Corp Vehicle Two Wheeler Loan||1 Year MCLR (8.65%) + 3.60%= 12.25% p.a.|
|Central Bank of India||Cent Vehicle Loan Floating||1 Year MCLR (8.30) + 0.40%= 8.70% p.a.|
|Fixed Rate (Repayment within 36 months)||1 Year MCLR (8.30) + 0.40%= 8.70% p.a.|
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Two Wheeler Loan Interest Rates in India
The rate of interest of two-wheeler loans differs from banks to banks. The rate is not the same with two different lenders as every lender has their own pre-fixed parameters based on which the final rate is determined. The interest rates are usually floating and linked to the MCLR (Marginal Cost of Funds Based Lending Rate). Because a two-wheeler is a depreciating asset, the interest rates are generally higher when compared to other loan products.
Usually, the two-wheeler loan interest rates in India range between 8% to 18% depending on the bank, the loan amount, type and model of the vehicle, loan scheme, repayment tenure, applicant's net income and employment type, source of income and credit history. The loan rates may also depend on the type of the loan applied for. Typically, banks offer two-wheeler loans in secured and unsecured form. While the interest rate charged on a secured loan is relatively lesser, an unsecured loan comes with higher interest rate.
Features and Benefits of Two Wheeler Loans
Two-wheeler loans come with a hoard of features and benefits and this is why these are highly preferred by the users. Some of the vital features and benefits of the two-wheeler loans offered in India are listed below:
- With most of the banks offering loans up to 90% of the on-road price of the vehicle, you can purchase any brand new two-wheeler without giving any second thoughts.
- Burning up all your savings to purchase a two-wheeler is a risky option. Instead, avail a two-wheeler loan to relieve you of the financial burden. As an added advantage, you can also plan your budget effectively and pay back the loan in affordable EMIs.
- Two-wheeler loans usually cover the cost of insurance, accessories and registration.
- To get more out of your two-wheeler loan, check for loan partnership options with your automobile dealer.
- Two-wheeler loan requires minimal documentation and is offered for all sections of people and all class of customers.
- The income criteria is also lenient and most of the banks offer motorbike loans for people with an annual income of Rs.50, 000.
- There is either no prepayment penalty or a nominal foreclosure charge for paying off the two-wheeler loan ahead of the tenure.
- Most of the banks also offer flexible repayment options which will enable the customer to choose a comfortable tenure.
Two-Wheeler Loan Miscellaneous Charges
Apart from the interest rate the borrower also has to pay several associated charges and fees while availing a two-wheeler loan. Since, these extra charges add to the loan-related expenses, these are vital aspects that a borrower needs to consider while applying for a loan. The commonly applied charges that usually come along with the loan are as follows:
- Processing charge: The processing fee is a mandatory amount that the borrowers are required to pay at the time of loan application. This fee is charged by the banks for processing the loan request and it is expressed as a percentage of the total loan amount. It usually ranges from 0.50% to 5% of the loan amount which account to minimum Rs.600 to maximum Rs.5000.
- Foreclosure fee: Banks charge an amount of money on prepayment or foreclosure of the two-wheeler loan before the end of the loan tenure. This is the process of paying a part of the loan or closing it before time. However, the foreclosure charges for two-wheeler loan is relatively lower, even certain banks don't charge any amount for pre-payment of such loans.
- Late payment fee: In case the borrower default on paying the monthly instalments of the two-wheeler loan on time, the banks or lenders charge a penalty in the form of late payment fee. This fee needs to be paid on time along with the due amount to avoid any further consequences.
- Other charges: Besides these, the banks or financial lenders levy several other charges on a two-wheeler loan as per own their lending policies. Some of the miscellaneous fees that the borrowers of two-wheeler loans usually have to pay are issuance charges for copy of loan report and credit report, administrative charges, etc.
Types of Two-wheeler Loan and Interest Benefits
As told earlier, banks and other financial organisations provide two different types of two-wheeler loans depending on the security required to avail the loan. Here are the details of the types of two-wheeler loans that a borrower can apply for:
- Secured two-wheeler loans- Secured two-wheeler loans are those which are offered against a security or a collateral. While taking this type of loan, the borrower needs to offer an asset as a collateral whose value is equivalent to the value of the loan. This collateral acts as a security against the loan and on the basis of this security the bank offers the loan. The main advantage of this two-wheeler loan variant is that it is available at a lower interest rate compared to the other variant as it minimises the risk of the lender in case of defaults. Since this loan comes with low-risk factor, it is easily available and you can get it without hassles.
- Unsecured two-wheeler loans- Unsecured two-wheeler loans are completely different from the secured ones as they don't require any asset as security. The borrowers can get this variant just by fulfilling the basic eligibility criteria mandated by the lender. Hence, it makes an ideal solution for borrowers who don’t have any asset to pledge against the loan. However, as this loan doesn't require any security, the risk associated with it is more and this is why the interest rate of an unsecured two-wheeler loan is comparatively higher than that of a secured one. In other words, this loan doesn’t offer much interest benefit to the borrowers.
Factors that Impact Two-wheeler Loan Interest Rate
The interest rate is a vital aspect of a two-wheeler loan and the borrower needs to consider and compare the interest rates of various banks before zeroing their search on any particular loan product. But before you start your search for a suitable loan with low-interest rates, you should know about the various factors that play a significant role in deciding the interest rate of the loans. Here are some of the vital ones:
- Type of vehicle- The rate of interest of a two-wheeler loan largely depends on the type of the vehicle that the borrower is planning to buy. Whether the customer intends to purchase a moped, a scooter, a motorcycle or a high-performance two-wheeler, he or she needs to pay varied interest rates as the rate varies for each of these two-wheeler categories.
- Employment Type of Applicant: The employment nature of the applicant usually have a significant impact on the rate of interest that is offered by the banks. As they consider a salaried individual to be a more credible borrower compared to a self-employed individual, the interest rate charged for the salaried borrowers is lesser than the rate offered to the self-employed individuals.
- Range of Income- As the applicant’s income range determines his/her ability to repay the loan in the form of EMIs every month, it greatly affects the interest rate that he/she is offered with. While an applicant with higher income range is usually offered a low-interest rate, an individual having relatively lower income gets loan with higher interest.
How to Compare Two Wheeler Loan Interest Rates?
With so many two-wheeler loans on offer, it often becomes difficult for the customers to find out the best one which will give them significant benefit. These given tips will help you to compare the loans efficiently and zero your search on the most profitable one:
- Before deciding on a two-wheeler loan product, carefully analyse all the features that it has to offer. Consider the product only if you find the majority of the features matching with your requirements.
- Check if the interest rates for two-wheeler loan with regards to a particular bank is floating or fixed. Also, use a two-wheeler loan EMI calculator to decide your loan affordability.
- In a two-wheeler loan EMI calculator, all you have to enter is the loan amount, tenure and the interest rates. The calculator will project the monthly EMI along with the repayment schedule which will help you decide if the loan on that interest rate is affordable.
- Compare different two-wheeler loan products and check whether features like nil-foreclosure charges, insurance and high quantum are offered or not. Also, make sure to compare the interest rates for two-wheeler loans using a third-party comparison website.
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Two-Wheeler Loan Eligibility and Documentation
Eligibility- In India, most of the banks offer two-wheeler loans to people within the age group of 18 to 65. The applicant can be a student, a salaried profession or a self-employed customer. Select banks also offer specialized two-wheeler loan products for agriculturists. The income criteria for two-wheeler loans depend on the type of loan and is at the discretion of bank.
Documents - The applicants have to submit an ID proof and a proof of address. Income documents like bank account statements, salary slips, income tax return statements and certificate of employment are also required. Agriculturists and self-employed individuals have to submit relevant supporting documents to avail a loan for two-wheeler.
Since the interest rate of your two-wheeler loan will determine the final amount that you have to pay every month as a part of the loan repayment procedure, you should take a calculative decision. Shop around, compare all the available loan products and offered interest rate well before opting for a two-wheeler loan product.
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